THE report of the International Narcotics Control Board for 1995 states: "Money laundering entails surreptitiously introducing money of criminal origin into the legitimate channels of a respectable business in order to make it appear normal and legal."
The money derived from criminal activities cannot be directly invested in legitimate business and offenders adopt different methods to launder ill-gained wealth. Apart from gambling, fraud, double invoicing, use of travel bureau channels and self-loaning, the following laundering methods are in vogue:
Over-invoicing of exports: Launderers misuse Value Based Licensing and export spurious goods to fictitious companies on inflated rates. The money received is in fact illegitimate but shown as legitimate and tax-free income. Nearly one-fifth of India's total exports, worth $4.5 to 6 billion, are over-invoiced.
Under-invoicing of imports: This is done to pay customs duty on lower values. Out of total imports worth $34 billion, $3.4 to 5.1 billion worth of imports are under-invoiced.
NRI account:By opening NRI accounts where the source of income does not have to be disclosed.
Smurfing:An American term for depos iting small amounts of crime proceeds. Under the US Bank Secrecy Act, 1970, transactions only above $10,000 are reported to the authorities.
